An inheritance should improve life for the person receiving it. If you receive benefits through the Supplemental Security Income (SSI) program administered by the Social Security Administration, money or assets left to you could jeopardize your benefits unless you know and follow the SSI inheritance rules.
SSI is a needs-based program. You must be in need, as evidenced by limited resources and income, but federal rules about SSI and inherited money could result in a loss of eligibility. This is unlike the Social Security Disability Insurance (SSDI) and Social Security retirement programs with eligibility based on contributions made through payment of Social Security taxes on your income from working.
An inheritance that would not affect eligibility for retirement or SSDI benefits could reduce or make you ineligible for benefits through SSI. This blog explains the SSI inheritance rules, so you’ll know what to do if you inherit money or assets.
SSI Resource and Income Limits
To qualify for disability benefits through SSI, you must meet income and resource limits. Resources, or assets, you own cannot exceed $2,000 for individuals and $3,000 for couples.
Income limits cannot exceed the federal benefit amount, which is $967 for an individual and $1,450 for eligible couples. These are the federal benefit amounts for 2025.
Some resources do not count toward the $2,000 and $3,000 limits. For example, resources do not count:
- The value of a house used as a primary residence.
- A motor vehicle used primarily for transportation.
- Life insurance policies of $1,500 or less.
- A burial plot.
- Personal and household items.
For purposes of SSI eligibility and assets or resources, the value of a house you excluded as a resource undergoes a transformation if you stop using it as your primary residence. You must include the value of the home as a resource when you no longer reside in it.
What Is an Inheritance?
The Social Security Administration rules define an inheritance as a cash, right, or noncash item that you receive as a result of the death of another person. Something you receive as an inheritance does not count as a resource or income until it has a value you can use to acquire food or shelter.
For example, if a relative prepares a will designating that you receive $5.000 upon their death, it is neither income nor a resource until you have use of it, which is not until after their death. An inheritance counts for purposes of SSI either when you receive it or when the date of closure of the estate, whichever occurs earliest.
If you inherit a resource, its value counts toward the resource limits unless you have the right to exclude it. For instance, the inheritance of a car counts as a resource unless it qualifies for exclusion because of its use for transportation.
Certain situations make it difficult to define something as an inheritance. If an eligible couple, meaning that both of them qualify for SSI, owns a home, it is a resource. The house does not become an inheritance upon the death of one of them.
What Happens To SSI When You Inherit Money?
The Social Security Administration classifies money you receive as earned or unearned income. Earned income includes:
- Wages
- Self-employment net earnings
- Royalties
- Honoraria
- Sheltered workshop payments
Money you receive that is not earned is unearned income and includes the following:
- Social Security benefits
- Pension payments
- Unemployment benefits
- State disability benefits
- Interest and dividends
- Cash given by friends and relatives.
Earned and unearned income count toward reducing your monthly SSI benefit payment in the month you receive them. Money received as an inheritance counts as unearned income in the month you receive it. The amount of the inheritance reduces your SSI benefits for the month.
If you receive a lump-sum payment as an inheritance that exceeds your monthly SSI benefits, you will not receive a payment or receive a reduced payment for the month from SSI. The remainder of the lump sum becomes a countable asset or resource.
You cannot avoid SSI eligibility and assets challenges by refusing the inheritance or giving it away. The Social Security Administration may suspend your eligibility for benefits for as long as three years for transferring a resource.
Get Help From Sackett Law
If faced with the challenges of SSI benefits and inheritance, you may have options to prevent loss of your SSI eligibility. For example, SSI inheritance rules may allow use of inherited money to purchase an excluded resource, such as an automobile used for transportation purposes. Another option for use of inherited money could be the creation of an ABLE account, such as the CalABLE program in California.
Contact Sackett and Associates for a free consultation to learn more about your rights and obligations pertaining to SSI benefits and inheritance money. The disability lawyers at Sackett Law provided guidance and representation to people with disabilities in Northern California and throughout the United States for 45 years.
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